Will the Government Shutdown Affect My Personal Finances?

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On the first day of the open enrollment period for the Affordable Care Act, or Obamacare as it is commonly called, instead of questions about healthcare, many Americans are asking how the government shutdown will impact their lives.

In the short term, most people who are not furloughed government employees won’t take a direct hit to their personal finances, but some effects of the shutdown could eventually prove costly or ruin plans.

If the shut down drags on and you’re in the middle of a home sale or mortgage refinance transaction, you could find yourself among those with ruined plans. Federal loan processing will come to a halt as a result of the shutdown as well, so those in the process of buying a home with a federal loan or trying to refinance out of a Federal Housing Administration loan may face processing delays. FHA loans account for about half of all mortgages.

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U.S. Department of Agriculture processing of loans will also be delayed until the government is funded. The USDA provides home loans to farmers and others who qualify, which may affect rural areas. This comes as news of home price increases in all states has been reported, but a strengthening market could be hindered by the shutdown. In addition to delays from FHA loans, furloughs at the Internal Revenue Service could eliminate access to records required for home sales transactions.

The IRS also will not have help lines available to answer questions about taxes during the shutdown. And while it may come as a relief to some, audits will cease during this time as well.

Military, disability, social security, and unemployment checks will continue to roll out, but if the shutdown becomes lengthy, the processing of these checks could be delayed. It is also unclear as to whether some government contract workers will get paid during the shutdown, or if they will receive back pay if they do not. Anyone whose paycheck is based on government contracts would be wise to be careful with money right now in the event the shutdown continues for a long time.

People waiting for a passport may have to wait longer if the shutdown lingers, and foreign travelers awaiting visas could face delays. According to New Jersey Representative Rush Holt, passport processing will cease during the shutdown. In 2011, in anticipation of a shutdown, the State Department said it would not accept new applications, but would continue to process those already filed — although it isn’t clear how passports would be handled this time around. Aside from affecting tourism and leisure travel, businesses could be hurt if meetings are canceled or it appears the U.S. isn’t a good place to do business.

Tourism within the country will be affected, as national parks and museums close. On the day of its 123rd anniversary, Yosemite National Park is closed, along with all other national parks, and museums such as the Smithsonian. Imagine planning a vacation to see the Statue of Liberty, only to arrive and feel the shock and disappointment as the Griswolds did in National Lampoon’s “Vacation,” when they discovered Wally World was closed.

In addition, White House tours are canceled, Philadelphia’s National Mall is closed, and the restaurants and shops surrounding them will also likely take a financial hit. Shops which are frequented by government employees may see business slump, so anyone dependent upon income sources could be affected.

The question of whether or not your personal finances will be hit by the shutdown depends on your unique circumstances and how long the shutdown lasts. Those in the process of mortgage transactions may be the largest group affected if the shutdown lasts for a substantial length of time. This would not only hit the pocketbooks of everyday Americans, but could put a drag on the economy as a whole. If it ends quickly, the effects might not be noticed much at all.

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